Tips for Tito!

Tito Mboweni is sworn in as South Africa's new finance minister on 9 October 2018. Photo: Leila Dougan, Daily Maverick

Tips for Tito!

24th October 2018 | Spotlight

By Russell Rensburg, Rural Health Advocacy Project

As we move towards the Medium-Term Budget Policy Statement (MTBPS) with yet another Finance Minister, it is difficult not to get a sense of dejavu. Like Minister Gigaba, Minister Mboweni is facing a challenging balance between maintaining fiscal responsibility and repairing the damage inflicted by poor management of resources or more bluntly put; unbridled corruption. The National Budget is an important opportunity to show the extent to which the state is to return to its core mandate, which as the Constitution reminds us, is to “improve the quality of life and release the capabilities of all our people.”

Does the government’s multiple priorities and declining revenue envelope pose a threat to the progressive realisation of health? More pertinently, will the current economic woes lead to further decline of the public health system? While the reforms presented in the NHI Bill released in July this year provides some good news, there is a more immediate need to address the crisis in health. The answer may be in the manner in which we prioritise our available resources in the upcoming medium term policy statement.

Following the Finance Minister’s appeal for inputs via social last week, we would to include the following “Tips for Tito”.

The health budget is projected to grow to just over R205-billion in the coming year with just over R195-billion transferred to provinces through the provincial equitable share allocations and a number of conditional grants. While this is a substantial portion of the national budget, when considering the evolving crisis in health it is unlikely to meet the immediate needs of the health sector. It is therefore imperative that available resources are prioritised to both protect the system from further decline while at the same time ensuring access to quality health services for particularly vulnerable and underserved groups. A useful point of departure may be to once again suggest that careful consideration is given to the way we fund healthcare. The current intergovernmental arrangements, particularly the provincial equitable share formula, allocates funding to each province based on a number of measures including population size, school enrolment, health needs, economic activity as well as a management component. The Health component makes up around 27% of the total equitable share with the lion share going to Education (47%). The health budget is augmented by a number of conditional grants, the largest being the HIV/ TB grant. These grants are allocated nationally and transferred to the provinces based on relative need. The grants are implemented at the provincial level and as such are included when calculating the percentage each province spends on Health. While some provinces appear to allocate as much as 31% of total budget to Health, others like the North West, Free State and the Northern Cape allocate less that 26%. Accordingly, we recommend a review of the current inter-governmental fiscal arrangements with a view to ensuring that funding allocated for health is used for its intended purpose.

Human resources currently make up 60% of health budgets. Attempts to address this through expenditure caps and moratoria on new recruits without a rational process that considers health needs, causes more harm. There are currently over 40 000 vacancies across public sector health facilities. This is despite compensation of employees accounting for more that 65% of total public sector health expenditure. This year provinces have been able to meet the states’ obligations to provide internship opportunities for health sciences students despite a chronic shortage of health professionals. In the case of newly qualified health professionals who are required to complete a year of community service in the public sector, they are unable to find placements. Rural facilities continue to struggle with the recruitment and retention of health workers a situation exacerbated by the ongoing moratoria on the appointment of staff. What is needed is an analysis of the distribution of health care professionals and an effective prioritisation of posts that ensure that service delivery is not compromised.

An important tool in optimizing available resources is the availability of good management information systems. Good quality data would provide the necessary insights to optimize the delivery of good quality health as well as improve health system responsiveness. There are currently over 42 information systems used in the public health system. Experts suggest that 27 of these are redundant and if cancelled, beyond improving the use of data they could also free up close to R2-billion in savings. This money could be used to improve data quality systems particularly at primary health care level as well as improve connectivity of all facilities.

Since 1994, the country has done well in expanding physical access to health care facilities. There are currently over 4 000 public sector facilities spread across the country. The quality of the facilities varies from province to province and at times, also within provinces. For instance, in the Eastern Cape some rural facilities lack the requisite infrastructure to operate as health facilities. There is also significant variation in the manner new facilities are specified with primary health care clinics costing anywhere between R20 and R80-million depending on the province. It is therefore no surprise that government’s performance in the hospital revitalization grants performance have been below expectations. In the last two years, the programme has achieved a mere 30% of its contracted targets while spending close to 100% of the available budget. The poor performance is particularly jarring when we consider the dire need for infrastructure and maintenance. In rural areas, the poor quality of accommodation for all cadres of heath staff contributes to poor retention of staff but these projects are often not prioritised. Accordingly, the infrastructure programme may be a good opportunity for public private partnership through which infrastructure spending could be financed off the main budget. This could release as much as R8-billion that could be invested in other priorities such as primary health care.

Finally, wasteful and irregular expenditure coupled with growing accruals in Health Departments point to serious governance failures in the management of supply chain processes. While the initiatives such as the South African Institute of Chartered Accountants (SAICA) supported programme to improve financial management in health is important, these failures are not necessarily as a result of poor skills. The events that led to the collapse of the North West provincial government is a useful reminder of the impact of political interference in the management of state resources. The relative weakness of citizen accountability such as hospital boards and health committees as well as provincial oversight bodies point to a much deeper crisis in government. The National Department of Health have indicated a budget shortfall of approximately R14-billion per annum when added to accrued expenditure at the provincial level, the financial shortfall is close to R28-billion. This shortfall needs to be addressed as a matter of urgency. To address the lack of good governance, there must be an investment in the capacity of hospital boards and health committees to improve accountability at each level of care.

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